CXO

E-consultancies: We're not dead yet

Many e-consultancies are praying that business will rebound soon, but odds are that client demand will continue to wane. Many of the players may be close to extinction, but columnist Tom Rodenhauser says they won't go down without a fight.

In Monty Python and the Holy Grail, the undertaker is wheeling his cart along medieval English streets collecting plague victims. Coming to Eric Idle’s very alive character, he checks his list and attempts to toss him in, whereupon Idle feebly protests, “I’m not dead yet.”

A colleague reminded me of this as we discussed the latest spate of bad news. As we pick through the pile of dead e-consultancies, we occasionally hear assertions from those still breathing. Which ones are really dead?

Scient will probably strike a deal with Hewlett-Packard. Lante is aggressively pursuing someone yet to be named. Organic is chatting up BBDO. Divine just picked the carcass of marchFIRST. Despite all the gloom and doom, there is grumbling from those still alive.

More than six months ago, analysts were predicting mass consolidation as the e-consultants moved away from the dot-com collapse in search of Fortune 1000 clients. The big firms were supposed to buy the little firms, and the little firms were supposed to band together to act like big firms. That hasn’t happened because consultants have a difficult time selling their vision to other consultants. And they’re usually the last ones to recognize their own impending fate.

In a boom market, buyers will pay ridiculous premiums to gain new business access or build services; witness the numerous roll-ups that drove e-consulting. During a bust, those seeking a deal will wait until all the enervated voices are stilled before striking.

So many of the e-consultants are hoping against hope that business will rebound in the next quarter or two. Unfortunately, client demand will remain soft over the next few months. And as business prospects whither, so too will the multiples demanded by sellers. Smart buyers know this and will act accordingly.

But let’s not confuse these impending mergers and acquisitions as the harbinger of massive industry consolidation. Eric Idle’s objections in the The Holy Grail were silenced by the undertaker’s club, who then observed, “You’re dead now.” Snuffing a few flickering flames merely reinforces the fact that consulting is more fragmented than ever these days.

Heard on the street
The Management Consultancies Association (MCA) elected John Tiner as its president for 2001–2002. Tiner has been global head of financial services at Andersen since 1997. MCA represents 36 leading UK-based consultancy firms, which currently employ more than 20,000 consultants.
Inside Consulting is written by Tom Rodenhauser as a free weekly supplement to The Rodenhauser Report. The report informs senior advisors and business executives of consulting trends and best practices. Subscription cost is $295 per year for 10 issues. Copyright 2001, Consulting Information Services, LLC. Reproduction is prohibited. Quotation with attribution is encouraged.
0 comments

Editor's Picks